SION FINANCE & LEASING P.LTD, MUMBAI V. ASST CIT 7(2), MUMBAI

ITA 2993/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7982 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U JUSTIN
• Assessee Lawyers: SUBHASH SHETTY
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.2993/M/2012 ASSESSMENT YEAR: 2007-08 ITA NO.3167/M/2009 ASSESSMENT YEAR: 2005-06 M/S. SION FINANCE & LEASING PVT. LTD., PLOT NO.112, SION KOLIWADA ROAD, SION, MUMBAI-400 022 PAN: AAACS9380E VS. ASSTT. COMMISSIONER OF INCOME TAX 7(2), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SUBHASH SHETTY, A.R. REVENUE BY : SHRI U. JUSTIN, D.R. DATE OF HEARING : 14.11.2017 DATE OF PRONOUNCEMENT : 20.12.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TILTED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE ORDER DATED 23.12.2011 & 27.02.2009 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2007-08 & 2005-06 RESPECTIVELY. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY. THE ASSESSMENT YEAR IN APPEAL IS T HE ASSESSMENT ITA NO.2993/M/2012 M/S. SION FINANCE & LEASING PVT. LTD. 2 YEAR 2007-08. THE RELEVANT PREVIOUS YEAR WAS THE FI NANCIAL YEAR ENDED 31.3.2007. THE ASSESSEE FILED ITS RETURN SHO WING THE TOTAL INCOME AT RS.1,02,99,334/-. THE ENTIRE INCOME WAS C OMPUTED UNDER THE HEAD BUSINESS INCOME. THERE WAS NO OTHER SOURCE OF INCOME UNDER THE SAID COMPUTATION. THIS COMPUTATION MADE A ND THE RETURN FILED WAS IN TERMS AS FILED CONSISTENTLY YEAR AFTER YEAR AND AS SUCH ACCEPTED BY THE INCOME TAX DEPARTMENT. THE ASSESSEE AS A COMPANY HAS THE OBJECTS OF CARRYING ON BUSINESS. IT TREATED THE PROPERTIES IT TOOK ON LEASE AND CONSTRUCTED BY ITSELF AS BUSINESS ASSETS. IT RETURNED THE INCOME THERE FROM AS BUSINESS INCOME AND CLAIME D DEPRECIATION ON THE ASSETS ALSO. IT ALSO HAD THE SOURCE OF REVEN UE BY WAY OF INSURANCE COMMISSION AND INTEREST ON LOANS GRANTED FROM TIME TO TIME, THE COMPANY'S MAIN BUSINESS BEING THE FINANCI NG AND LEASING ACTIVITIES. DURING THE YEAR, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) WAS OF A VIEW THAT THE INCOM E DERIVED BY LETTING OUT PROPERTIES BY THE ASSESSEE WAS TO BE TA XED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT UNDER BUSINESS I NCOME. THE ASSESSEE HAS RECEIVED THE RENT AS UNDER: S.NO. NAME FLOOR AMOUNT ALLEGED NATURE OF OWNERSHIP 1 LIFE INSURANCE CORPORATION OF INDIA, PLOT NO.112, SION KOLIWADA ROAD, SION, MUMBAI-400 022 GROUND FLOOR MEZZANINE 8300652 ALLEGEDLY SUB LEASE 2 CANARA BANK PLOT NO.112, SION KOLIWADA ROAD, SION, MUMBAI-400 022 LESS: LEASE RENT FOR THE MONTH MARCH 06 ALREADY OFFERED TO TAX IN THE ASST. YEAR 06-07 FIRST FLOOR/SECOND FLOOR 10130120 779240 OWNER ITA NO.2993/M/2012 M/S. SION FINANCE & LEASING PVT. LTD. 3 LESS: LEASE RENT PAID TO SION GARAGE PVT. LTD. FOR PART OF THE PREMISES LEASED TO LIC 146064 9204816 OWNER 3 SADGURU TERRACE GARDEN PLOT NO.112, SION KOLIWADA ROAD, SION, MUMBAI-400 022 30000 OWNER 17535468 THE ASSESSEES CASE IS THAT ASSESSEE IS NOT THE OWN ER OF THE PROPERTY BUT LIC IS THE OWNER OF THE AND IT HAS LEASED OUT T HIS PROPERTY TO THE ASSESSEE AND THE ASSESSEE HAS RECEIVED THE RENT FRO M THIS ABOVE PROPERTY. IT WAS A PRIVATE LIMITED COMPANY CARRYIN G ON THE BUSINESS OF FINANCE AND LEASING AND IN THE COURSE THEREOF HA D TAKEN A PROPERTY BEING GROUND AND MEZZANINE FLOOR CONSTRUCTED ON PLO T NO.112 AT SION AND FURTHER LEASED OUT. ON LEASED OUT PROPERT Y ASSESSEE CLAIMED THAT HE IS NOT THE OWNER BUT HE IS A TENANT OF LIC AND HE HAS MADE CONSTRICTION ON IT. THE ASSESSEES CASE IS THAT AS SESSEE IS NOT THE OWNER OF THE PROPERTY BUT LIC IS THE OWNER OF THE P ROPERTY, THEREFORE, AS PER THE MEMORANDUM OF ASSOCIATION ASSESSEE IS TH E PRIVATE LIMITED COMPANY, THEREFORE, INCOME FROM THIS LEASED PROPERTY SHOULD BE TAKEN AS INCOME FROM BUSINESS AND NOT INC OME FROM HOUSE PROPERTY. 3. THE AO AND THE LD. CIT(A) DISMISSED THE APPEALS FOR BOTH THE YEARS. 4. DURING THE COURSE OF HEARING, THE LD. A.R. SUBMI TTED THAT THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPER TIES AND INVESTMENTS LTD. VS. CIT (2015) 373 ITR 673 (SC) HE LD IN FAVOUR OF ITA NO.2993/M/2012 M/S. SION FINANCE & LEASING PVT. LTD. 4 THE ASSESSEE WHICH WAS DELIVERED ON 09.04.2015 AND THE ASSESSMENT ORDER WAS PASSED ON 18.12.1997. THEREFORE, THE AO HAD NO CHANCE TO VERIFY THIS JUDGMENT. MOREOVER, LD. A.R. SUBMIT TED THAT THE LD. CIT(A) AND THE AO WITHOUT VERIFYING THE RECORDS HAV E DECIDED THE APPEAL. THEREFORE, MATTER MAY BE RESTORED TO AO TO DECIDE IT AFRESH AS PER THE DECISION OF HONBLE SUPREME COURT (SUPRA ). 5. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT L IC HAS LEASED OUT THE PROPERTY TO THE ASSESSEE FOR 99 YEARS. THE REFORE, ASSESSEE IS DEEMED OWNER OF THE PROPERTY. WHEN ASSESSEE IS DEEM ED OWNER OF THE PROPERTY THE RENTAL INCOME FROM THIS PROPERTY I S NOT A BUSINESS INCOME BUT IT IS A RENTAL INCOME ONLY. THEREFORE, AO AND THE LD. CIT(A) ARE JUSTIFIED AND MATTER SHOULD NOT BE RESTO RED TO AO. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE HONBLE SUPREME COURT JUDGMENT WAS DELIVERED ON 9 TH APRIL 2015. WE FIND THAT THE HONBLE SUPREME COURTS JUDGMENT I S RELATING TO INCOME FROM HOUSING IS TAXABLE AS BUSINESS INCOME O R RENTAL INCOME. BUT EVERY CASE HAS TO BE SEEN IN RESPECT OF THE FAC TS. WE FIND THAT IN THE INSTANT CASE THE LIC HAS LEASED OUT THIS PROPER TY TO ASSESSEE FOR 99 YEARS. THEREFORE, ASSESSEE IS DEEMED OWNER OF T HE PROPERTY. MOREOVER, PROPERTY IN QUESTION IS RESIDENTIAL PREMI SES AND HAS BEEN GIVEN ON RENT TO DIFFERENT PARTIES AND ASSESSEE IS EARNING RENTAL INCOME FROM COMMERCIAL ACTIVITIES. THEREFORE, AO I S DIRECTED ITA NO.2993/M/2012 M/S. SION FINANCE & LEASING PVT. LTD. 5 TO CONSIDER THE SAME AND DECIDE THE MATTER AFRESH A FTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2017. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.